Much of what follows is taken from the book Making Employee Ownership Work, by John D. Stewart. BNA's first executive editor and later its CEO, John played a key role in launching BNA as an independent, employee-owned company on January 2, 1947.
Dave, you have a great idea. There's clearly a need for the information you're providing. But it's not an advertising medium. There aren't enough people who need that kind of reporting in depth to provide an advertising base. But the people who do need it will pay enough to support you without advertising.Stewart got this advice from John Taylor, the LRR managing editor who hired him:
Just keep in mind that nobody is going to read what you write because he wants to. He's reading it because he has to. All he wants is the facts. If you can serve them up in a way they can be digested easily, that's fine. But don't strain yourself trying to write deathless prose.1946 and the Lead-up to Employee-Owned BNA
I've always been fascinated with this story, which in so many ways reflects what was going on in the county after the war.
We were editors, not accountants. We knew without asking that the business was losing money, with half a dozen services that had lost their reason for being when the war ended. But we also knew that, once the deadwood was cleared, there remained some solid services with a loyal cadre of subscribers.John continues:
Later, no one was quite sure who first proposed that we give everyone at BNA an equal chance to invest in the business. And to this day, no one can tell you whether we agreed to that idea because we were idealists or because we were chicken, looking to spread the risk. In any case, before we broke up that evening, we had determined to open up ownership of the new BNA to all employees."BNA managers and supervisors were asked to submit anonymously the amount they’d consider investing in the new company. To the disappointment of the founding five, the total was less than $100,000. Still, that was enough working capital, since subscribers paid up before they received products.
- Never underestimate the power of a woman.
- Don't look a gift horse in the mouth.
- Sometimes it's better to trust your instinct than to worry about not having a lot of figures.
In its first year of operation, BNA lost $21,500; at midyear the loss had been as high as $75,000. In February of that first year, Dean Dinwoodey, now BNA's president, called in the eight members of BNA's first board of directors and proposed that everyone take a 10 percent cut in pay. Dean's salary at the time was $25,000 a year. John -- second in command – earned $12,500. Dean withdrew his salary-cut proposal when it became clear that it didn't have much support. (A year later, it came to light that Dean had directed accounting to cut his salary by 20 percent to $20,000.)
Thanks in good part to the foresight and tenacity of one editor, BNA in 1970 staked its claim to dominance in the emerging field of environment and safety regulation. For several years before that, Stan Degler, then a staff member on the Daily Report for Executives, had been pushing for a service on environmental controls. Rachel Carson's Silent Spring had sounded an alarm and it was clear that there was growing public interest in the subject. But a consulting firm engaged to do a a market survey reported that a service wouldn't fly.Soon after the launch of ER, Congress passed the Occupational Safety and Health Act (OSHA), and BNA quickly launched the Occupational Safety and Health Reporter. It was an immediate sensation and prospects "literally took it out of the sales reps’ hands," John recalls.
Stan kept pushing. Largely on his own time he prepared a mockup of a service to be titled Environment Reporter (ER) along with a draft of promotion materials. He convinced executive editor Ed Donnel and the president [John] to give the go-ahead and the service was a success from the start.
Here's John's moral for this chapter in BNA's history:
If you want to fight a hostile takeover, there's no stronger armor than widely diffused employee ownership of your voting stock. It's better than a poisoned pill.Contrasting the Thomson and Bloomberg Offers
Thomson made its aggressive take-over bid after BNA had said "Thanks, but no thanks" to Thomson's initial overtures. Bloomberg announced its interest in starting a Washington-based operation like BNA's, and then BNA and Bloomberg executives held a series of friendly discussions. The environment was very different from the Thomson case.
Thomson's bid came in 1982 when BNA was at the apex of its "Golden Age" of profitable growth, like our economy generally. Bloomberg's offer came at a time when BNA's revenue had shown little or no growth for about five years, and it was clear that the company needed expensive new information technology.
Now Bloomberg and BNA executives are singing the same tune: "This is a marriage made in heaven."
So, R.I.P employee ownership... but onward and upward, BNA!